Why B Corporation Certification is on the Rise
In California particularly, issues of environmental impact and public impact are at the forefront of corporate and political leadership. In part, this is due to the constant challenges that arise through a highly agricultural geography meeting very tumultuous environmental factors, including drought, fire and flood. This is of heightened importance with industries that require quite a bit of environmental impact, such as the wine business.
Water and other environmental issues and factors in such an industry are as ripe as the grapes are plentiful. In the past several years, but more in the past few years, we have seen business leaders take interest in B Corporation certification and making a positive impact on the environment and all of its stakeholders, rather than solely focusing on shareholders profits. This not only can generate brand affinity and appeal to younger generations which may be more climate-aware and product-conscious, but this can appeal to impact investors, general consumers and local communities, as well as result in positive business practices long term for regenerative and sustainable operations.
B Corporations Explained for Beverage Businesses
The Difference Between B Corps and Benefit Corporation Status
Often times B Corporation status is confused with benefit corporation status. B Lab (a non-profit with a mission to transform the global economy to benefit people, communities and the planet) administers B Corporation Certification to businesses that undergo a B Impact Assessment and meet heightened standards of social and environmental impact (and meet and maintain other ongoing standards thereafter). B Corporations must commit to transparency requirements related to their impact and operations and commit to being legally accountable to all of their stakeholders. A benefit corporation is merely one way to meet this requirement but not the only way. As B-Lab states:
“[b]enefit corporation is a legal structure that embeds stakeholder governance into a business’ DNA, ensuring the business considers its impact on all of its stakeholders…. [but] the benefit corporation structure is not a certification and benefit corporations are not required to meet B Lab’s standards.”
Benefits of B Corp Certification for Wineries and Other Beverage Businesses
B Corp certification can help your winery or beverage businesses stand out in a crowded market, attract customers who share your values, and create a positive impact in your community and beyond.
B Corp certification can bring several benefits to a winery or beverage business:
- Brand Differentiation and Visibility: B Corp certification is a widely recognized symbol of a company’s commitment to social and environmental responsibility. B Corp certification can provide a unique differentiation for your winery or beverage business in these highly competitive markets. Increasingly, customers are looking for products and services that align with their values. B Corp certification can help you appeal to customers who are looking for products and services that go beyond just financial performance and have a positive impact on people and the planet.
- Improved Credibility and Reputation: B Corp certification can help improve your beverage business’s reputation and build customer trust by demonstrating a commitment to social and environmental impact. This can translate into increased customer loyalty and a stronger brand image.
- Access to Resources and Networking Opportunities: B Corps receive ongoing support and resources from B Lab, the nonprofit organization that certifies B Corps. This can include access to training and education, marketing resources, and opportunities to connect with other B Corps and impact investors.
As a B Corp, you will be part of a community of like-minded businesses that are dedicated to creating positive social and environmental impact. This can provide valuable networking opportunities and help you connect with other businesses that can support your growth and success.
- Improved Performance: The B Corp certification process requires a comprehensive evaluation of your business practices and operations. This can help identify areas for improvement and encourage you to adopt more sustainable and socially responsible business practices.
B Corp Standards for Wineries and Other Beverage Businesses
The B Corporation Standards evaluate a company’s performance in areas such as governance, workers, community, environment, and customers. Below are some of the ways in which they apply to beverage businesses:
- Governance: B Corporation Standards evaluate a company’s governance practices, including its corporate structure, ownership, and decision-making processes. For beverage businesses, this could include evaluating the transparency of your business practices, your commitment to social and environmental impact through corporate and equityholder approval processes, and your approach to stakeholder engagement.
- Workers: B Corporation Standards evaluate a company’s treatment of workers, including its employment policies and practices, compensation and benefits, and worker engagement. For beverage businesses, this could include evaluating your labor practices, the health and safety of your workers, and your efforts to provide fair wages and benefits, as well as your support of diversity and inclusion in your labor practices.
- Community: B Corporation Standards evaluate a company’s impact on the community, including its contributions to local economies, its engagement with stakeholders, and its approach to diversity, equity, and inclusion. For beverage businesses, this could include evaluating your contributions to the local economy, your efforts to support local suppliers and farmers, and your approach to diversity and inclusion in your business practices.
- Environment: B Corporation Standards evaluate a company’s impact on the environment, including its energy and resource use, waste reduction, and pollution control. For beverage businesses, this could include evaluating your water use, your efforts to reduce packaging waste, and your approach to sustainable agriculture and production practices.
- Customers: B Corporation Standards evaluate a company’s impact on customers, including its product quality, customer service, and ethical marketing practices. For beverage businesses, this could include evaluating your product quality and safety, your efforts to educate customers about your products, and your approach to ethical marketing and advertising practices.
Steps for B Corp Certification
To become a B Corporation (receive the certification), there are multiple operational and legal steps. The B Impact Assessment must be taken and reviewed, including an interview process and general assessment process, then an adoption of the B Corporation Legal Framework into the business and other ongoing verification and review to maintain status.
B Corporations are intended to focus more on general public benefit (a material impact on society and the environment, or an obligation to operate in a responsible and sustainable manner, depending on the location of incorporation) rather than focusing more narrowly on shareholder primacy. This means the business shifts its focus from shareholder primacy to all stakeholders and related impact. There are transparency and related reporting requirements associated with this and governance requirements which align with this mission and manner of doing business.
To become a certified B Corporation, you need to follow these steps (among other steps that may be required from time to time):
- Review the B Corporation Standards: Review the B Corporation Standards to ensure your business aligns with the principles and requirements. The B Corporation Standards evaluate a company’s performance in areas such as governance, workers, community, environment, and customers.
- Legal Requirements: To become a B Corporation, you will want to update your legal structure to reflect your commitment to the B Corporation Standards. This typically involves amending your organizational documents and governance documents to include language that reflects your commitment to these standards. This process will vary depending on your jurisdiction and the laws of your state and the type of entity you operate your business under.
- Assessment: Once your legal structure is in place, you need to undergo a comprehensive assessment to determine your social and environmental impact. This assessment is conducted by B Lab, the nonprofit organization that certifies B Corporations. The assessment will evaluate your company on a range of metrics, including governance, workers, community, environment, and customers.
- Certification: If your company scores high enough on the assessment, you will be eligible for certification as a B Corporation. You will need to pay a certification fee, which covers the cost of certain ongoing monitoring and support from B Lab.
- Ongoing Commitment: Becoming a B Corporation is not a one-time process. You will need to maintain your commitment to the B Corporation Standards and undergo regular assessments to ensure your business continues to meet the requirements, as well as update your impact assessment and verify your updated scores from time-to-time and after certain transactions.
To maintain the B Corp certification of your winery or beverage business, you must undergo a recertification process. This typically involves updating your Impact Assessment every three years or after a change of control or initial public offering and demonstrating that your company continues to meet the B Corp standards.
The recertification process is an opportunity for you to reflect on your beverage company’s progress and identify areas for improvement. It helps ensure that B Corps remain committed to their social and environmental impact and continue to lead the way for businesses that balance purpose and profit.
During the recertification process, you will need to provide updated information about your company, including any changes in your business practices or operations that affect your social and environmental impact. The B Impact Assessment will then be re-calculated based on this updated information, and your certification status will be updated accordingly.
It’s important to be proactive and plan ahead for the recertification process so that wineries and beverage businesses can continue to demonstrate commitment to the B Corp standards and maintain certification.
How Rogoway Can Assist Your Beverage Business
At Rogoway Law Group, we can assist in a number of ways, including:
- Explaining the nuances and requirements to obtain and maintain B Corporation Certification;
- Re-working the corporate framework to assist in facilitating appropriate governance to comply with the heightened standards required (e.g. amending bylaws, preparing shareholder agreements, having specific language in consents and minutes to maintain focus on the important required factors and mission, and aligning employment agreements and staffing practices and policies with company’s mission); and
- assisting in related reporting, transparency and review to ensure maintaining such status (noting that B Corporations often are required to report to the public annually and recertify every 3 years).
It’s important to note that the process of becoming a B Corporation can be complex and our team of corporate transactional lawyers can guide you through the process.
While there will be initial challenges and expenses with re-focusing your beverage business to fulfill the B Corporations standards, the long-term benefits to companies, the stakeholders, and the public can easily outweigh these upfront costs.
Please reach out to the beverage lawyers at Rogoway Law for a complimentary initial consultation for your winery or beverage business. Together we can positively impact your business, the community, and the planet.